Probability Calculator

Master Your Trading Probability

Understanding probability and risk management is crucial for successful trading. This advanced calculator helps you analyze potential outcomes and optimize your trading strategy through statistical analysis and Monte Carlo simulations.

Essential Trading Concepts

Risk Management

Control potential losses through proper position sizing and risk allocation per trade.

Win Rate

The percentage of profitable trades in relation to total trades executed.

Risk/Reward Ratio

The relationship between potential profit and potential loss for each trade.

Position Sizing

Determining the optimal trade size based on your account balance and risk tolerance.

How to Use the Probability Calculator

  1. Initial Balance:

    Enter your starting trading account balance. This will be used as the base for calculations.

  2. Risk Settings:

    Choose between percentage-based or fixed amount risk per trade. This determines how much you're willing to risk on each position.

  3. Win Rate:

    Input your expected win rate as a percentage. This can be based on historical performance or strategy backtesting.

  4. Reward/Risk Ratio:

    Set your target reward compared to risk. A ratio of 2 means you aim to make twice what you risk per trade.

  5. Monte Carlo Simulation:

    Enter the number of simulations to run (e.g., 1000). This powerful tool helps you see potential account growth paths, understand maximum drawdown risks, calculate probability of reaching profit targets, and make data-driven decisions about position sizing.

Trading Strategy Insights

Keys to Successful Trading

  • Consistent Risk Management: Maintain disciplined position sizing across all trades
  • Statistical Edge: Focus on strategies with positive expected value
  • Psychology Management: Stay objective and follow your trading plan
  • Portfolio Protection: Never risk more than you can afford to lose

Understanding Probability Scenarios

Conservative Trading

  • Lower risk per trade (1-2%)
  • Higher win rate focus
  • Moderate reward/risk ratios

Balanced Approach

  • Medium risk per trade (2-3%)
  • Balanced win rate/RR ratio
  • Consistent position sizing

Aggressive Strategy

  • Higher risk per trade (3-5%)
  • Lower win rate acceptable
  • Higher reward/risk ratios

Understanding Your Results

The calculator provides comprehensive analysis of your trading strategy. Here's how to interpret the key metrics:

Expected Profit

The projected profit based on your win rate, risk/reward ratio, and number of trades.

Maximum Drawdown

The largest potential decline in account value during the trading period.

Win/Loss Distribution

The statistical distribution of winning and losing trades over time.

Kelly Criterion

Optimal position sizing based on your win rate and reward/risk ratio.

Monte Carlo Analysis

Best Case Return
0%
Click to view trades
Average Return
0%
Click to view trades
Worst Case Return
0%
Click to view trades
Percent of Profitable Scenarios
0%

Expected Results

Trade Details

Balance Summary

Initial Balance: $999.97
Final Balance: $1,211.08
Total Return: 21.1%
Trade Profit: $211.12
Total Commission: $3.75

Risk-Adjusted Metrics

Sharpe Ratio: 1.5 Measures excess return per unit of risk. Higher is better. >1: Good, >2: Very Good, >3: Excellent
Sortino Ratio: 1.8 Similar to Sharpe but only considers harmful volatility. Better for non-normal distributions
Calmar Ratio: 2.1 Measures average annual return relative to maximum drawdown. Popular in managed futures

Performance Metrics

Profit Factor: 1.50 Ratio of gross profits to gross losses. >1 indicates profitable strategy
Best Trade: $11.99
Worst Trade: -$12.11
R-Multiple: 2.3 R-Multiple shows how many times your risk you're making in profit. Example: If risking $100 per trade, an R-Multiple of 2.0 means you're making $200 on average. Values: <1.0: Losing more than risking, >1.0: Making more than risking, 2.0: Making twice your risk
Position Impact: 1.2 How position sizing affects overall returns. >1 indicates positive scaling

Drawdown Analysis

Max Drawdown: 4.0% Largest peak-to-valley decline in portfolio value
Average Drawdown: 1.1%
Recovery Time: 5 trades
Underwater Time: 15%
Valley-to-Peak: 8 trades

Streak Statistics

Max Wins in Row: 7
Max Losses in Row: 3
Average Win Streak: 2.1
Average Loss Streak: 1.4

Position Size Calculator (Kelly Criterion)

Helps you decide how much to risk per trade based on your win rate and reward/risk ratio.
Aggressive (Full Kelly):
0%
This is the mathematically optimal risk per trade, but it's too aggressive for most traders. Example: 20% means risk $2,000 on a $10,000 account.
Balanced (Half Kelly):
0%
This is a balanced approach - half of the aggressive size. Most professional traders use this. Example: 10% means risk $1,000 on a $10,000 account.
Conservative (Quarter Kelly):
0%
This is the safest approach - quarter of the aggressive size. Recommended for new strategies or volatile markets. Example: 5% means risk $500 on a $10,000 account.
Expected Return Per Trade:
0
The average return you can expect per trade. Example: 0.2 means on average you'll make 0.2 times your risk amount per trade. If risking $100, expect to make $20 per trade on average.

Trading Strategy Analysis

📊 Monte Carlo Simulation Analysis

💰 Balance and Returns Analysis

⚠️ Risk Analysis

📈 Performance Analysis

🧠 Trading Psychology

📏 Position Sizing Recommendations

🎯 Strategy Improvements

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